Why Would Big Tobacco Companies Say No to $224 Million for Kentucky? SmallTobacco Companies Invite R

Source from:  LEXINGTON, Ky., Jan. 10 /U.S. Newswire/ 01/11/2006

Clark Corson, President of the Council of Independent Tobacco Manufacturers of America (CITMA), called on state legislators in Kentucky "to reassess the financial benefits that the cigarette Master Settlement Agreement (MSA) brings to the Commonwealth, and to re- evaluate the way tobacco companies are taxed in the state to ensure every dollar generated from the MSA remains in the state for the benefit of Kentuckians. If adopted a replacement tax could generate an extra $132 million in new revenue for the commonwealth each year, on top of the estimated $92 million that Kentucky should receive in MSA payments in 2006." Commenting on a CITMA presentation to the Kentucky General Assembly Appropriations and Revenue Committee, Corson claims that "Kentucky receives only 1.76 percent of the money collected each year from the MSA, yet Kentuckians buy 3.0 percent of all cigarettes sold nationally. This means nearly half of all the MSA money collected by the big tobacco companies from Kentucky smokers is then handed over to the wealthier states such as New York and California, who get the lion's share of the tobacco settlement money." Corson added, "It is inherently unfair for Kentuckians that they should receive less money under the MSA than the state would have received if all manufacturers had simply been taxed in the state. Kentucky needs to treat all companies the same and put an end to the system of rebates, carve-outs, exemptions and special deals for the companies that signed onto the MSA." Corson advocates replacing MSA payments and the non-signers escrow payments with a replacement tax. "That way, all of the loopholes in avoiding payments disappear, and every company wanting to sell cigarettes and roll-your-own tobacco to adult consumers in the state makes a straightforward payment. The payoff for the state is that instead of collecting only $92 million in revenue, the state can expect to receive in excess of $224 million every year going forward. That is real money for the state, and real money to support all Kentuckians." CITMA is a national trade association that represents the interests of small independent tobacco manufacturers who chose not to sign the 1998 cigarette Master Settlement Agreement (MSA). Enditem